The retail giant, which has reportedly chosen London for listing, is facing fresh claims of poor working conditions in its supply chain in China.
ADVERTISEMENTShein shares are set to go public on the London Stock Exchange (LSE), marking the controversial online retailer's initial public offering (IPO) as one of the largest globally this year.
However, a recent report revealed that claims of poor working conditions made against the Chinese online retail company are still a reality for many workers in the company's supply chain.
The company said in a statement, “While we do not recognise many of the allegations in this report, the discussion on working hours and wages raised by Public Eye is important to us, and we have made significant progress on enhancing conditions across our ecosystem."
Similar reports, dating back a number of years, are believed to be one of the reasons that Shein is going for a London IPO rather than a New York one.
Shein filed for an IPO with the US Securities and Exchange Commission and also asked for approval from China's securities regulator (CSRC) in November 2023.
The company, which sells cheap clothes in more than 150 countries, made more than $2 billion (€1.85 billion) in profits for 2023, according to the Financial Times and has been valued at around $66 billion (€61 billion).
Despite delivering such promising figures, the Singapore-based company may not be able to make it in New York.
Although Shein has yet to receive an official answer from the US authorities, the firm is already facing regulatory hurdles and pushback from US politicians. Republican Senator Marco Rubio has asked the US Securities and Exchange Commission to block Shein's bid to list publicly in New York unless the company discloses more about its operations, including its close ties with China itself.
Meanwhile, the CSRC has also informed the company that it would not recommend a US IPO, according to Reuters.
As a result, Shein is now speeding up its efforts for a London listing, apparently as a back-up option, even though the US IPO plan is still officially under consideration.
Unnamed sources told Reuters that the firm started engaging with the London-based teams of its financial and legal advisors to explore a listing on the LSE early this year. Shein also intends to ask for the CSRC's approval for a London IPO this month.
Cheap clothes at a price: 75-hour week for workers
One issue that is repeatedly resurfacing concerns the company's alleged workforce malpractices in its supply chain in China.
Reports emerged about overwork and low wages in 2021, after which Shein pledged to carry out improvements. It now says the company has "zero tolerance" for forced labour and pays competitive rates to its suppliers so they can support their workers.
Despite those assurances, a new report is questioning whether any improvement did in fact take place.
Swiss non-governmental organisation (NGO) Public Eye has followed up with its own investigations from 2021 in a number of Shein's southern Chinese manufacturing plants and says: "Illegal working hours and piecework wages remain a typical feature of the everyday lives of the workers interviewed."
The NGO, which interviewed 13 people in 6 factories in the Guangzhou area in southern China, concluded that excessive overtime is still a problem, working hours in these workshops were 75 hours a week two years prior, and now, they say, it hasn't changed.
"I work every day from 8 in the morning to 10.30 at night and take one day off each month. I can’t afford any more days off because it costs too much," read the report quoting a worker in late summer 2023.
Shein said in their statement that the size of the current sample should be seen in the context of their efforts to improve working conditions concerning "thousands of suppliers and workers within the supply chain."
ADVERTISEMENTWorkers reportedly earn the equivalent of €768-€1280 a month, depending on the season, the factory and their level of expertise. These wages have changed very little since the 2021 investigation, according to the report.
Shein highlighted that a recent audit researching the working conditions of 4,000 workers found that they earn basic salaries (before overtime) that are on average, two times higher than the local minimum wage.
Interviewees for the NGO's report said they worked an average 12-hour day – minus lunch and dinner breaks – at least six, but usually even seven days a week.
According to the company's Code of Conduct for suppliers, employers must not work more than 60 hours per week (including overtime) and they have the right to at least one day off a week, noted the report.
Shein claimed that the audits carried out in their supply chain found a decrease of severe wage violations, such as failure to pay minimum wage.
ADVERTISEMENTThe company pledged to invest "tens of millions of dollars in strengthening governance and compliance across our supply chain", adding that they "will continue to make substantial investments in these areas".
